The price you see for a hire car usually includes basic protection against damage and theft, but that protection rarely means you are fully covered. If the car is damaged, you are typically liable for the first part of the cost, known as the excess. At the rental desk you will be offered ways to reduce it, and before you travel you will see standalone policies that promise the same thing for less. This guide explains how each piece works, what is often left out and how to choose.
The key terms
- Excess. The maximum you pay towards damage to the car, or its theft, before the rental company’s cover takes over. In the US and Canada it is called the deductible. The amount varies widely by company, country and car group, so always check the figure in your rental terms.
- Collision Damage Waiver (CDW). Not strictly insurance, but an agreement by the rental company to limit what it charges you for damage to the amount of the excess. In most European rentals it is included in the price. In the US it is often called a Loss Damage Waiver (LDW) and may be sold as an optional extra at the counter unless your rate already includes it.
- Theft Protection (TP). Works in the same way for theft of the car, again usually subject to an excess.
- Third-party liability. Covers injury to other people and damage to their property. In the UK and the EU, rentals include it because motor insurance is compulsory. In the US, the liability cover included with a rental can be limited, and companies offer Supplemental Liability Insurance to raise it, so check carefully what your rate includes.
- Excess reduction or zero-excess cover. Sold by the rental company at the desk, sometimes under names such as Super CDW. You pay a daily charge and the excess falls to zero or a small amount.
- Excess reimbursement insurance. Bought separately, before you travel, from an insurer or alongside your rental booking. If you are charged for damage, you pay the rental company and then claim the money back.
What basic cover often leaves out
Even when CDW and theft protection are included, many rental agreements exclude certain parts of the car or certain situations, which means you could pay the full cost rather than just the excess. Common exclusions include:
- tyres and wheels
- the windscreen, windows, lights and mirrors
- the roof and the underside of the car
- the interior, including stains, burns and tears
- lost or damaged keys
- putting the wrong fuel in the tank
- towing and recovery charges
- damage caused by driving on unpaved roads, by unauthorised drivers or by breaking the rental terms
Some desk products cover these items only in their most expensive tier, and standalone policies vary too. Read the list of what is and is not covered, not just the headline.
Your three main options
1. Accept the standard excess
You pay nothing extra and drive with the included cover. The rental company holds a deposit on your credit card, usually at least as large as the excess. If the car comes back undamaged, the hold is released. If it does not, the cost of the damage up to the excess, often plus an administration fee, is taken from it.
2. Buy the rental company’s excess cover at the desk
This is usually the most expensive option per day, but the simplest. With zero-excess cover there is normally no claim to make if something happens, the deposit is often smaller and arguments over minor marks tend to disappear. At some companies it is also the only way to rent with a debit card. Check whether it includes tyres, glass and the other common exclusions, or whether those need a further top-up.
3. Buy standalone excess reimbursement insurance
Standalone policies usually cost much less than desk cover, and annual policies suit people who rent several times a year. The trade-off is that the rental company does not recognise your policy. It will still hold the full deposit, and if there is damage it will charge you first. You then claim the money back from your insurer. The same applies to any cover bought with your booking from anyone other than the rental company itself.
A worked example
To illustrate with made-up round numbers, imagine a rental with an excess of 1,200. You return the car with a scuffed bumper that the company prices at 400 to repair, plus an administration fee.
- Standard excess only: the 400 and the fee are taken from your deposit, and that is the end of it.
- Desk zero-excess cover: you usually pay nothing for the bumper, but you have paid the daily charge for every day of the rental, whether or not anything happened.
- Standalone excess insurance: the 400 and the fee are taken from your deposit, and you then claim them back from your insurer with the paperwork. Whether the administration fee is refunded depends on your policy.
None of these is right for everyone. The question is how much you value convenience and a smaller deposit compared with the lower cost of a standalone policy.
Deposits and payment cards
If you decline the desk cover, make sure your credit card has enough available limit for the deposit as well as your other spending on the trip. The hold can take several days, sometimes longer, to disappear after you return the car. Some credit cards, particularly in the US, include rental car damage cover as a card benefit. If you plan to rely on one, read its terms, as many exclude certain countries, vehicle types or longer rentals.
How to claim on standalone excess insurance
- Report any damage to the rental company at the time and make sure it is recorded on the return paperwork.
- Keep the rental agreement, the pick-up and return damage reports, the final invoice, any repair estimate or invoice, and the card statement showing the charge.
- Add your own photos and videos, and a police report if there was a theft or an accident involving another vehicle.
- Submit the claim promptly, as policies set time limits, and ask the rental company for an itemised breakdown if the charge is not explained.
Questions to answer before you book
- What is the excess for this car group, and is it different for damage and theft?
- How much is the deposit, and which payment cards are accepted?
- Does your chosen cover include tyres, glass, the roof, the underside, keys, misfuelling and towing?
- Does it cover every named driver, the country you are visiting and the full length of your rental?
- If you are renting in the US, how much liability cover is included?
Which option suits you?
If you rent once a year and want the least hassle, desk cover may be worth its higher cost, especially on a short rental at a busy holiday airport. If you rent often, an annual standalone policy is usually better value, provided you are comfortable with the deposit and the claims process. Whatever you choose, avoid paying twice for the same cover. Our airport pages, for example Málaga, Palma de Mallorca and Orlando, include local tips on deposits and pick-up, and our airport car rental checklist covers the rest of the process from booking to return.
